What the Broker Compensation Disclosure Rule Means for Employers

Undisclosed broker compensation can be enormous. Take the case of a Texas public school district in the Lower Rio Grande Valley who thought their broker was earning $126,000 in fees.

We were engaged to audit their self-funded health plan. Much to their surprise we discovered the district had two brokers (not one) and between the two they were earning $614,000 per year.

Highlights in The Article Link Below:

Beginning Dec. 27, 2021 insurance brokers and consultants must disclose all compensation to clients if they expect to receive $1,000 or more in direct or indirect compensation

With this new compensation disclosure rule, employers will see precisely the cost of a broker’s services…….Employers will no longer need to guess how much of their money goes toward their group health plan; they will now be able to see it clearly…….

Plan fiduciaries—whether they be the employer, their carrier or TPA—must be aware that the disclosure rules impose new obligations upon them.

Fiduciaries could begin getting disclosure documentation from their broker as early as this fall, so preparation will be key.

Plan fiduciaries (Employer) are responsible for enforcing these requirements

If a broker fails or refuses to disclose all compensation the fiduciary must formally notify the Department of Labor

If the employer does not report the broker/consultant’s failure to disclose in a timely manner, they could be subject to fines for a prohibited transaction under ERISA.

For self-funded plans, legal responsibility for plan compliance will typically fall to the employer

https://ehd-ins.com/what-does-the-broker-compensation-disclosure-rule-mean-for-employers/

RiskManagers.us is a specialty company in the benefits market that, while not an insurance company, works directly with health entities, medical providers, and businesses to identify and develop cost effective benefits packages, emphasizing transparency and fairness in direct reimbursement compensation methods.

 

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